IEEE Power Electronics Magazine - March 2018 - 52

Patent Reviews

by Art MacCord

standard Essential Patents and
FranD-time for a rethink?

have written several times on
standard essential patents,
including the IEEE approach to
standards setting; see my column in
the September 2015 issue of IEEE
Power Electronics Magazine. A standard essential patent covers a technology that is necessarily implicated
when meeting a standard that a standard setting organization (SSO)
agrees to. The concern has been that
the patent owner will use the standard-setting process to induce the
other members of the industry to
commit to his or her technology and
then demand exorbitant royalties for
use of the patented technology. The
IEEE addressed this issue related to
its SSOs by implementing rules that
invite patent owners to provide a letter of assurance that signifies the
patent owner's approach to the
licensing of its patents if the patented technology is accepted as part of
the standard. A preferred licensing
approach is to agree to license the
patents on a fair, reasonable, and
nondiscriminatory (FRAND) basis.
Recently, there have been new
concerns, i.e., that there could be
abuses caused by the other participants in the SSO. These concerns
have been voiced by very influential
sources, including the acting chair of
the U.S. Federal Trade Commission
(FTC) and the assistant attorney gen-

Digital Object Identifier 10.1109/MPEL.2017.2782405
Date of publication: 23 February 2018

IEEE PowEr ElEctronIcs MagazInE

This freeze out can take the form of
eral of the Antitrust Division of the
refusing to seriously consider the
U.S. Department of Justice (DOJ).
new technology or refusing to negotiThe F TC a nd the DOJ both have
ate with the innovator in good faith
jurisdiction to enforce the antitrust
to reach reasonable license terms.
laws of the United States, so their
The DOJ commentator points out
concerns suggest that additional
that the hold-up issue (i.e., when the
focus on the rules and processes of
i n nov a t or " hold s
s t a ndards setting
up" the industry)-
may be necessary.
which was the priAn SSO is a group
A preferred licensing
mary concern in the
of industry particiapproach is to agree
previous round of
pants who convene
to license the patents
c on s ider a t ion of
to agree on what
on a fair, reasonable,
standards setting
a standard should
and nondiscriminarules-has a recipb e and ensure the
tory basis.
rocal in which the
interoperability of
innovator is subject
products and proto being "held out"
cesses involved in a
by the implementers. The prospect of
new technology. One new concern is
a holdout offers the implementer of
that an innovator with a patent who
the technology a crucial bargaining
participates in an SSO may be subject
chip in negotiating a royalty license
to concerted action by the other paror other term. The innovator makes
ticipants (the parties who implement
his or her investment before the
the standard) to the detriment of the
implementers make theirs, since a
innovator. The general public may also
patented proposal submitted to the
be harmed if the technology of the patSSO must have sufficient technical
ent owner is prevented from becoming
development to warrant adoption as
commercially viable for anticompetithe standard. The refusal to deal with
tive reasons. Devaluing patented innothe innovator for any noncompetitive
vations in this way can also have the
reason freezes out the innovator from
undesirable effect of diminishing the
recouping the benefit of his or her
motivation to innovate.
investment, leaving the innovator
An example of such an abuse
with little or no recourse. On the other
would be when action is taken by
hand, if the patent owner unreasonindustry incumbents who are the
ably asserts his or her patent after
implementers of a specific technoloagreeing to a FRAND licensing term,
gy to "freeze out" a new innovator
accord i ng to th is new school of
who has a better technology, simply
thought, his or her efforts are just a
to maintain their market position.

z March 2018

Table of Contents for the Digital Edition of IEEE Power Electronics Magazine - March 2018